SSTI Digest

Venture development organizations (VDOs) increasingly serve as the Swiss Army knife of small business growth and innovation throughout the country due to their diverse range of entrepreneurial programs, direct financing options, and commitment to local economic development. Their unique roles in the entrepreneurial ecosystems and regional public-private partnerships have allowed for startup success despite the financial instability brought on by the COVID-19 pandemic. Likewise, annual impact reports and program outcomes reveal many VDOs are serving as well-equipped options for confronting the problems of race and gender inequity that exist within the entrepreneurial and innovation landscape.

In a previous article, SSTI detailed the limitations of public funding in solving the country’s rural broadband issue. While increased public funding is certainly part of the equation to bring internet capabilities to the near 14 million people who do not have access, there is potential to leverage new innovative technologies to bridge the broadband gap across America. Telecommunications companies and tech companies have developed many innovative ways to build out broadband capabilities in rural areas. In this article, SSTI analyzes some of the developing broadband innovations and solutions.

Telecom innovations

Throughout the past decade, the Latino entrepreneurial landscape has experienced both a growth in average annual revenue and an increase in the establishment of new employer businesses. However, Latino business owners remain significantly less likely than white business owners to receive loan approvals from major banks, resorting instead to financing options that expose the business owners to more personal financial risk including personal and business lines of credit and personal home equity loans. The strengths and weaknesses of the Latino entrepreneurial environment are explored in the recently released 2020 State of Latino Entrepreneurship Research by the Stanford Latino Entrepreneurship Initiative. The initiative gathered information from over 3,500 surveyed Latino owned employer businesses, alongside 3,500 white owned businesses, to examine the similarities and differences between the white and Latino entrepreneurial experience.

The overall employment outlook for the recipients of doctorate degrees earned at U.S. institutions has improved from 2015 to 2019, while the research activities conducted by these highly trained and educated individuals has started to shift away from basic and applied research activities towards activities focused on design and development. Doctorate recipients play an essential role in developing the knowledge base leveraged in creating new technologies and companies in the innovation economy. Understanding the employment trends of this vital group can help in crafting programs and policies to strengthen local innovation economies.

Pulling from the NSF’s recently updated Survey of Doctorate Recipients, this edition of Useful Stats provides an analysis of labor force participation, unemployment, and involuntarily working out-of-field rates of doctorate recipients with degrees earned at U.S. institutions and who still live and work in the United States. This analysis also considers the shares of employed doctorate recipients who primarily conduct Research and Development (R&D) activities at their jobs.

Labor Force

The most recent annual report from the Small Business Administration (SBA) concludes that a majority of participating federal agencies did not comply with the mandated minimum spending requirements for the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) programs.

SSTI is making Addressing Capital Access in 2021, which had previously been available only to SSTI member organizations, publicly available. The paper is focused on helping states and their partners make the most of the opportunity presented by the newly-refunded State Small Business Credit Initiative (SSBCI 2.0), which provides $10 billion to states to support capital access. Topics covered include a review of SSBCI 1.0, the current landscape for debt and investment access, and recommendations for states developing programs in 2021.

The introduction to the research brief is excerpted, below.

Last week, a bipartisan, bicameral group of legislators reintroduced the Endless Frontier Act, a bill that would authorize more than $112 billion over five years for new research and commercialization activities within the National Science Foundation (NSF) and the Department of Commerce. This proposal would establish multiple tools at each agency to support regional innovation economies. Sen. Schumer (D-NY), the driving force behind the legislation and the Senate majority leader, is looking to advance the bill through the Senate quickly, but is being slowed down despite bipartisan support.

Summary

In 2014, Tennessee’s Republican governor, Bill Haslam, created the nation’s first program to ensure high school graduates could attend community and technical college tuition-free, Tennessee Promise.  While several states have followed suit in one form or another, President Joe Biden wants to take the concept nationwide with the federal government footing $109 billion of the bill through his American Families Plan. Announced during his first address to Congress on April 28, free community college was just one of the proposals outlined that could dramatically alter regional capacities to support innovation, entrepreneurship and competitiveness across the country.

President Joe Biden has nominated Alejandra Y. Castillo to serve as the next assistant secretary for economic development in the U.S. Department of Commerce. If confirmed, she will have a unique opportunity to leave a significant imprint on regional efforts toward growing prosperity as a result of the $3 billion appropriated to the Economic Development Administration in March through the America Rescue Plan Act. 

Her past professional career is fully consistent with the Biden administration’s commitment toward broadening economic opportunity to more Americans. Castillo is the immediate past CEO of YWCA USA, where she led the 163-year-old organization and its 204 associations serving over 2.3 million women and families across 1300 communities in the United States.  She also served in senior leadership roles in two previous presidential administrations with a specific focus on international trade, minority entrepreneurship and economic development. In 2014, she was appointed by the Obama administration to serve as national director of the Minority Business Development Agency, becoming the first Hispanic American woman to lead the agency.

As state budgets move into the legislatures for final negotiations and approvals, the last of the governors have addressed their constituents and put forth their proposals. While a renewed sense of hope is seeping into the latest addresses, governors are still cautious and guarded in proposing new programs. Broadband, small business, education and workforce initiatives continue to be among the innovation-related initiatives announced by the state leaders, with the intent that those efforts will also boost the economic recovery of the states.

As the new administration settles in, the Economic Development Administration (EDA) has updated its investment priorities — the guiding principles behind all of its competitive grants. Changes to the priorities are outlined below so that participants in local innovation economies are better able to align their proposed programs to these federal priorities.

The EDA’s new list of investment priorities includes seven points, with the inclusion of “Equity,” “Technology-Based Economic Development (TBED),” and “Environmentally-Sustainable Development” being three notable changes. The list of EDA’s investment priorities, including commentary on their differences from previous administrations’ priorities, is as follows:

If venture capital was water, then sea levels continue to rise.  Yet more and more innovation-based startups across the country seemingly are being left high and dry as private venture capitalists continue to push their money into bigger, later stage deals. Investors seem increasingly set to cruise toward cashing in on the currently hot exit path of public listings. All of the key metrics in the latest Pitchbook-NVCA Venture Capital Monitor suggest many of the youngest innovation opportunities have been left out of recent VC activity, a trend that typically hurts those geographic areas receiving less VC than national averages. 

Pitchbook reports the total venture capital invested during the first quarter of 2021 nearly doubled the amount invested in Q1 2020, logging 92.6 percent more dollars flowing into portfolio firms. This explosive growth comes in the wake of the record year that 2020 proved to be for the VC industry.  Fundraising “also proceeded at a record-setting pace with $32.7 billion raised across 141 funds. For perspective, $79.8 billion was raised in 2020, the current annual record,” the authors write.